Follow-up on the Greenland incident: If the US and Europe were to clash, could Europe really utilize its $12.6 trillion in US assets?
Deutsche Bank's research report:The sell-off of US Treasuries by Europe could become a major weapon against the US. This report states that Europe is the largest lender to the US, holding $12.6 trillion in assets. However, the European Central Bank (ECB) cannot weaponize these assets because a portion of them are held by non-government entities. Many assets are owned by investors from other regions who use European instruments to hold these dollar assets, along with a significant share of the private sector—except for Norway's sovereign wealth fund. Even if they were sold, who would take over these assets? Therefore, a large-scale sell-off might lead to a rapid appreciation of the euro, triggering an economic recession in Europe itself. Both economies would face 'mutually assured destruction,' making direct confrontation unlikely.
Bessent criticized this report and stated: Europe dares not sell off US Treasuries. Trump said: If they insist on doing so, he would launch massive retaliation. Later, the head of Deutsche Bank apologized to Bessent. However, this action would only drive the ECB to buy more gold and sell US Treasuries at a faster pace (India has reduced its holdings of US Treasuries, moving further away from dollar-denominated assets while buying gold).
However, it’s important to note about gold: Despite the current booming market conditions, one must be cautious! A severe price discrepancy exists between gold futures and spot prices, with futures surging too rapidly, especially COMEX gold, which could potentially cause delivery issues due to insufficient physical supply...